Supermarket giants Coles and Woolworths have recorded growth in Q1 FY24, especially across their online channels and loyalty programs.
With the nation’s supermarket duopoly under scrutiny for how they are responding to the cost of living challenges faced by its customers, Q1 FY24 results show that despite the pushback, Coles and Woolworths are performing well as customers seek convenience and value.
Coles said that, “Through our customer insights work, customers have shared that they are increasingly eating and entertaining at home, seeking out loyalty points and bonus offers, and looking for more affordable alternatives as they seek more value in response to cost of living pressures.”
Woolworths echoed the sentiment stating its impressive B2C ecommerce sales growth continues to be driven by a growing demand for convenience.
Coles is tracking well into FY24 with Group sales revenue totalling $10,251 million for Q1, a 6.7 percent increase on Q1 FY23. The supermarket’s growth was underpinned by its continued investment in digital, Supermarket ecommerce revenue grew by 24.6 percent with penetration increasing to 9.1 percent. Liquor ecommerce grew even more, with revenue growth of by 32.2 percent with strong growth in the on-demand channel as customers seek convenience through home deliveries. Coles app active users increased by 39.4 percent with new features driving customers to it including “shop similar”, where customers are provided alternatives to temporarily unavailable items, and shopping list enhancements resulting in higher average order value.
Woolworth’s digital investments have also driven growth. Overall, its Group sales revenue totalled over $17 million for the quarter, with supermarket sales making up $13.082 million. Ecommerce sales increased by 18.4 percent to $1,559 million with penetration reaching 12 percent, an increase of 1.2 pts on the prior year. Double-digit growth in delivery sales was driven by increased demand for Same Day orders, now 38 percent of total delivery orders, as well as an acceleration in growth of its instant service, Delivery Now which grew by 66 percent.
Weekly average traffic to Food and Everyday digital platforms reached 17.5 million, up 25.2 percent on the prior year with weekly active users of Everyday Rewards and Woolworths apps growing 44 percent and 37.4 percent respectively. According to Woolworths, this growth was assisted by the release of a new digital tool, Best Unit Price, which helps customers find the lowest unit price for items and has already become the most popular digital filter for customers. According to the company, enhancements to existing digital tools such as personalised shopping lists and recipes are also driving increased customer engagement.
Loyalty programs drove growth for the supermarkets as customers seek better value. Coles’ Flybuys received Canstar Blue’s 2023 “Most Satisfied Customers” Award for reward programs with recognition for value, rewards, accessibility and partners, with Flybuys active members increased by 9.9 percent in the quarter and the number of customers participating in Flybuys offers increased by 22 percent.
Looking ahead, Coles stated, “we continue to focus on delivering value across our everyday prices, Down Down offers, weekly specials and promotions, personalised Flybuys offers and our exclusive brand range.”
Woolworth’s Everyday Rewards active membership increased by 6.8 percent in Q1 on the prior year to 9.2 million active members. Strong momentum in active member engagement was further supported by the launch of Everyday Rewards Member Pricing during the quarter, which has reportedly resulted in the strongest scan and tag rates to date in Woolworths Supermarkets, at 56.2 percent in store and 70 percent online respectively.
Looking ahead, Woolworths Group CEO, Brad Banducci, said,”while sales trends in October to date have remained broadly in line with the trend lines in Q1, the trading environment remains uncertain and value for money remains a key focus for our customers across all our businesses.”